This is a natural because you can transfer (1035 exchange) from a life insurance policy to an annuity without tax issues. The original basis on the life insurance policy now becomes the basis of the annuity which means that there are situations where an annuity could grow without occurring tax liability.
Here are some situation and general information about life insurance.
Types of Life Insurance
Term Life Insurance, insurance for a specific time period or term. 10 years as an example
Whole Life, insurance for your whole life. Guaranteed premium, death benefit and cash value. Whole life is guaranteed
Universal Life, Limited guarantees and the premium presented to the prospect is usually set by the agent. Funds accumulate in contract based on insurance companies declared rate. Very few UL policies have guarantees other than the good name of the company. Most UL I have seen are under funded.
Variable Universal Life, same as universal life except the funds are invested in separate accounts (like a variable annuity). Once again limited guarantees.
Single premium products. It is possible to buy single premium whole life, universal life and variable universal life. The value to this concept is with the correct policy you can give your prospects a fully guaranteed contract that will never require funding in the future. There are some variations that will not fully guarantee future results so always do the correct due diligence.
Life Insurance Sales Opportunities
1. Exchange: Life insurance cash value will transfer to an annuity without any tax liability. 1035 exchange
2. Remix: Sometimes you can use the cash value in an old policy to purchase a new life insurance contract. The purpose would be to have a paid up policy (no more premiums), remove any loans (forgiven) or to increase the ultimate death benefit to the beneficiary.
3. Policy loans: If You are lucky to find a loan for a life insurance policy, is free money. Here's how it works, you can tell the customer that you get the loan forgiven. Most are bigger than life insurance for long on reason and need for life insurance now less. If the insurance company to adjust the cost base and the premium loan. This changes the amount of tax dollars, but if a claim is not like the death tax is paid. If the need for life insurance is no longerexists, the life of the loan in 1035 and the new base for the company pension. Sell this concept on two levels, loans go away and use the money for their payment except in case of need represented income. Just go and sell will make the loan, the client will love you and hate their insurance agent.
4th income change: if you find them, a pension, whose current goal is to transfer to the recipients of income tested. The taxpart of the deferred pension will be taxable as ordinary income to the recipient. Determining the share of taxable pension money (to keep the tax liability for clients) means to send a policy paid the present value yet. If these proceeds are paid to beneficiaries will be paid tax free. Just compare the future value of life insurance with the tax on retirement.
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